00:00You guys have done a lot of transactions around the United States.
00:02Stuff in Florida, do you have projects going on?
00:04Tell us about the environment, and I'm curious if you've got anything in Cape Coral or nearby.
00:09I don't have anything right now in Florida.
00:11We've been in Florida in the past.
00:13Something that Florida has to struggle with is rising insurance costs,
00:17and that has made it really hard for property owners
00:19and for new investors to come into that market because of insurance.
00:24Is that why you guys are staying out?
00:25We've been staying out of coastal for a little while.
00:27We started looking back at it again because insurance started to level out,
00:32but insurance rates are incredibly high.
00:34That's not just a Florida story.
00:35It's a California story, too.
00:37It's all coastal right now and fires, right?
00:39We get that in California.
00:40And we see that start to hit parts of California, like Malibu and the Malibu area,
00:45but for the most part, California real estate prices are still really, really high,
00:48even though it's challenging and expensive to insure those properties.
00:53When does that chicken come to roost?
00:54California real estate market has always been very unique in the sense that it's an appreciation market
01:00and not a cash flow market, so it's always been a little bit tight there.
01:04But when does that stop?
01:06I don't – it's a market that seems to not follow economics.
01:11And you don't have anything in California right now, right?
01:12We used to.
01:13We started in California.
01:14That's where we were for 10 years, and we do not now.
01:18So we are very cash flow oriented.
01:20So talk to us about the environment, what you are seeing today versus what it was six months ago, 12 months ago.
01:25I think it's been a few months since we last talked.
01:27Yeah, absolutely.
01:27We're still seeing a very bifurcated economy, both in the macro economy and then also within submarkets.
01:34So what we're seeing is a bit of mean reversion right now where markets had overgrowth are starting to cool down a little bit,
01:43starting to try to absorb all that overgrowth.
01:45And some of the markets that were more depressed that didn't overbuild are starting to rise.
01:50You see something like that in, like, Chicago or San Francisco where now all of a sudden you see 3%, 4% annual increases,
01:56which is really high compared to some of the rents in the country that are starting to drop.
02:00So we are seeing a tale of two cities.
02:03Since we last spoke to you, the Trump administration has come out with some different – I wouldn't call them policy policies.
02:12I'd say policy proposals to try to get housing within control for many Americans.
02:19Some of them target single-family homes and institutional investors.
02:24Is anything that you've heard from Washington, D.C., helping to alleviate the problem?
02:29You know, we're hearing a little bit about it in that single-family buy-to-rent or rent-to-own model.
02:37And we're not seeing it so – we don't hear proposals coming out as how are you going to help workforce housing or market-rate housing, right?
02:44So there are ways to help as far as subsidized housing like Section 8 or something like that.
02:49But ultimately what it comes down to is cost of living is rising so much, and it's more so than the cost of actual housing.
02:57That workforce housing or free market housing stays pretty stable.
03:01It grows slowly, but it stays a little bit independent from macroeconomics because you get a lot of friction in mobility.
03:08People aren't moving a lot out of their units.
03:11But then again, you know, we talk about this lack of affordable housing.
03:14Right.
03:15We have to dig into what is that?
03:17What does that mean?
03:18Well, we constantly, I think, pep our people with questions to try to understand.
03:21And before we got going, we said, well, you know, one of the things that we've kind of pushed on is building housing, affordable housing where the jobs are, whether it's a major city.
03:30Rather than having someone who's got to, you know, take a train or a bus or however, two hours or an hour and a half or something, you know, outside that major city in order to live, you know, affordably.
03:41Sure, sure.
03:42I mean, you see something like New York right now, and you've got units here that are vacant, but it's hard for landlords to bring them back online.
03:51How do they do that, especially when you've got threats of a rent freeze here in New York?
03:56How do you offset that for the landlord?
03:59So it's cheaper for them to leave them open than to rent them at a below market rate.
04:03That's true in some of the places in New York.
04:05New York is very specific.
04:07Okay.
04:07But not in other cities?
04:09In other cities, you're not seeing that as much, but you don't have those freezes like that.
04:14Even in places where you do have rent control, we are seeing some relief on other sides.
04:19I think that we do see that cities are starting to recognize that keeping landlords from raising their rents ends up hurting affordability overall.
04:29Where are you bullish right now?
04:31Where do you want to do new projects?
04:32We're really bullish in the Midwest right now.
04:35We like areas that are very stable.
04:38We don't like to see that overgrowth.
04:40We like to see places that have a lot of economic growth as far as workforce.
04:47So where in the Midwest?
04:49We love Ohio right now.
04:51We're buying a lot there.
04:52It's a great time to invest right now if you're very discerning and specific with what you buy.
04:57So we're looking for upside down capital stacks.
04:59So Southern Ohio, Central Ohio, Northern Ohio.
05:02I mean, these are all very different parts.
05:04Sure.
05:04Right now we're heavy in Columbus.
05:06We're looking in Cleveland.
05:08We're looking in Cincinnati.
05:11Okay.
05:11So that's everywhere.
05:12It's a little bit.
05:14We're all over the Midwest.
05:15We like other cities too.
05:16It really depends.
05:17We're more deal oriented.
05:19We're looking for where is that upside down capital stack that needs us to come in to infuse capital because that's what really happens.
05:25So much money has gone down south, certainly the southeast.
05:28Has that gotten overheated at this point?
05:31I mean, I've heard some signs or some stories about things like prices starting to come down, at least in kind of residential homes.
05:38But what are you seeing there?
05:40Right.
05:40So that's that sunbelt area or some of those overheated areas that are now coming back down.
05:45So I think that what happened is there was this oversupply of building.
05:50We hit this peak of building in like 2022.
05:54Those units started coming online.
05:56If you take a look at where we're at today, new development is 70% in 2025, below where it was at its peak in 2022.
06:06So now we're seeing that absorption.
06:08And so that drops prices for a little bit, but they'll even out and start to come back.
06:12So, Amy, in terms of affordability, bottom line, in your view, it's more about like thinking about why is it that people can't afford to buy homes?
06:23And is it wages or like is that what we need to be focusing on in your view from what you see?
06:28Right.
06:29So in what I deal with, we are not really competing against the home market.
06:33We are providing housing for renters by necessity as opposed to lifestyle renters or people who choose.
06:38But what we're seeing is really it's cost of living is high and cost of mobility is high.
06:45And so just getting out and packing up and moving and getting a new security deposit down somewhere and the costs of that is what is expensive.
06:53So we're seeing a lot more concessions on the front end as opposed to.
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